MUMBAI/AMSTERDAM, 1 September 2020: Attempting to regain margins and differentiate in an increasingly competitive industry, many whey ingredient players are leveraging their core R&D strength to seek further value.
Around 95 percent of the world’s whey comes as a by-product of cheese production. The whey ingredient industry has done a stellar job of turning the whey stream, which was once a waste product, into arguably one of the most technical and nutrient-dense ingredients of the global food ingredient sector.
Whey is a favored source of complete protein due to its impressive essential amino acid profile, and as consumer awareness of whey’s benefits has grown, demand for it has increased.
“The whey ingredient complex has seen strong returns in the sports-nutrition, clinical-nutrition, and infant-formula industries, which have driven investments across the globe. As a result, over 90 percent of the global whey stream is now utilized, bringing value to dairy farmers, manufacturers, and consumers alike,” according to Tom Bailey – Senior Dairy Analyst at Rabobank.
As investments and volumes have grown, there has been an influx of competition and some commoditization of whey ingredients. This led to rising pricing pressure across the whey complex. “Attempting to regain margins and differentiate in myriad ways, many ingredient players have leveraged their core R&D strength to seek further value, including focusing on the remaining by-products of whey concentrates, such as whey permeate, procream, and lactose,” says Bailey.
The R&D push has opened the doors to more complex product-development opportunities for the whey stream, such as galacto-oligosaccharides, human milk oligosaccharides, and beta-lactoglobulin. These products are sold in highly valuable and rapidly growing categories, such early-life nutrition. Prices for these whey derivatives are often high and relatively stable, helping whey ingredient manufacturers regain margin.
Rabobank anticipates a bright future for the whey ingredient landscape, with more new products on the horizon and a continued consumer focus on health and wellness, particularly in the post-Covid-19 landscape. However, manufacturing and capital costs are high, and it is necessary have a strategy, including flexibility along the whey stream, for the utilization of whey’s derivative streams.